Stubborn console prices hindering US market

A number of factors contributed to a "shocking" sales month for US retail in August, including stubborn price points for hardware, the growth of Apple's handheld devices and the continued success of console multiplayer gaming.

That's according to Wedbush Morgan analyst Michael Pachter, who reiterated previous comments that multiplayer gaming is too compelling for consumers to entertain buying new product, in-part the reason for a 14 per cent decline in new software sales.

But he also pointed to console prices that remain high compared to previous generation cycles, noting the PS3, Xbox 360 and Wii are priced the same as launch prices for the PlayStation 2, original Xbox and GameCube in 2000 and 2001.

"The price points for the three consoles remain out of reach for the 'mass market' that typically fuels software sales growth in the fifth full year of console cycles, and we believe that until all three consoles are priced below $200, it is unlikely that hardware sales will peak," he said.

With the handheld market tanking 25 per cent, Pachter doesn't see a pick up until the release of Nintendo's 3DS next year, as Apples iPod and iPhone have "become a credible substitute for the DS and PSP."

"Finally, we think Nintendo's decision to bundle two pieces of software with the Wii will impact software sales so long as the bundle is offered," he added. "The more casual segment is far more seasonal in purchase habits, so there is some hope that Wii software sales will recover in the next several months."